Planning For Private School Fees & Further Education

The cost of private school education has always been considerable, but over recent years paying for education has become more and more difficult. The cost of education for a child starting private school at five years old and finishing after his A levels at eighteen is now approximately ÂŁ200,000.

The ISC (Independent Schools Council) produced figures last year that showed school fees have risen by 4.5% last year and 4.6% the year before that.

With costs increasing in such a manner, it is worth having a solid plan of action in terms of preparing to send your child to private school or, afterwards, University – and how to handle the monetary repercussions of this.

Investments & Savings

Individual Savings Accounts (ISA) offer tax-free advantages for parents that are looking to save money. Different banks may offer different ISA rates but each can provide a stable way of saving and getting a steady return.

Other longer-term savings products, such as Flexible Savings Plans, allow you to invest in stock market funds with the added security of being able to withdraw your money whenever you need it.

Another option is an offset mortgage. Offsetting your savings against your home loan is a very common way for families to cope with the costs of privatisation and further education.

Stock Market

The stock market route could work well for those that are comfortable with a certain level of risk as well as those who are willing to consider tax-efficient venture capital trusts or enterprise investment schemes.

However, if you’re particularly risk averse consider popular equity income funds and look for shares with good yields and the potential to offer a steady return.

*Note: Read about investing wisely on our Investment Management section.

Allow Family To Help

It is not uncommon for families help school funding due to the benefits or IHT (Inheritance Tax) savings. One of the perks includes Annual Gift Exemption which includes gifts made to savings accounts, to all types of trusts (designated accounts), child trust funds and Junior ISAs.

It is also possible for parents to set up a discretionary trust so that grandparents can donate towards school and university fees. The income into these trusts are treated as the children’s own for tax purposes although parents cannot donate in the same way as it would be taxed in a different manner.

Private School & Further Education Financial Assistance

One way to allow yourself more saving time is to send your child to private school later on in their education. For example, your child could attend state primary school, then move onto private secondary education. If this is the route you intend to take it would be worth speaking to the primary school in question to see if they have sent students onto private secondary schools in the past.

There may also be certain tests your child needs to pass to be accepted into private secondary school which can be passed with the aid of a private tutor. A good tutor normally costs on average ÂŁ45 per hour, but this is a small fee to pay in comparison to full time private education fees.

It’s always worth checking what form of financial assistance is offered by the private schools and further education institutions that your child aims to attend. The ISC figures show that, on average, 28% students receive some form of help from their school, with an average amount of £4,239.

Most institutions will offer fee discounts to students that have particular fundings difficulties or a special talent in the form of a scholarship or bursary. Scholarships often cover a small amount of the fees necessary but are non means tested. In comparison, bursaries cover a larger portion of the cost but are means tested and your personal circumstances will be closely inspected.

There are many different tools in place to help make the payment easier, such as School Fee Plan which enables you to pay the school fees monthly independently rather than termly via the school’s bursar.

Invest Early & Keep An Open Mind

The advice that is most often offered in terms of saving to pay for private education and further education is to start saving early. Invest from the moment your child is born and you will have a good ten years of saving and investing before they start secondary school.

On the other hand, if you’ve done detailed research and concluded that you simply can’t afford it – don’t be downhearted. There are a lot of very well established state schools out there and many families choose to relocate into the catchment area of a better school.

Whilst this can be costly, it can be viewed as the more cost-effective option in comparison to private school fees.

For more information about wise investments and planning your finances for the future, get in touch with Expert Wealth Management today. You can contact us online or call 01993 772467.

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